EXHIBIT 10.1
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PLEDGE, ESCROW AND PROMISSORY NOTE AGREEMENT
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THIS PLEDGE, ESCROW AND PROMISSORY NOTE AGREEMENT (this "Agreement") is made and
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entered into as of October 12th 2004 by ▇▇▇▇ ▇▇▇▇ (the "Pledgor"), having her
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principal address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, in favour
of Sinovac Biotech Ltd. ("Lender"), having a principal address at No. 39 Shangdi
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▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇.
WITNESSETH THAT:
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WHEREAS, Pledgor owes the Lender the unsecured sum of $1,849,000US (the "Loan")
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which is now due and owing;
WHEREAS, Pledgor has offered to grant the Lender security on 3,000,000 common
shares (the "Shares") in the capital of the Lender owned by the Pledgor as
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security for the Loan and to make payments in accordance with this Agreement
WHEREAS, Pledgor has agreed to place into escrow and pledge herewith the Shares
represented by certificate no. 2646 and to grant a pledge of all Pledgor's
rights and interests in such Shares to secure with the Shares the Loan and
recovery of any part thereof on default of payment and which Loan to be repaid
on or before November 15, 2006 in accordance with the terms of this Agreement.
WHEREAS, Lender (also called the "Issuer") has agreed to the terms of this
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Agreement on the condition that Pledgor (i) deliver the Shares and transfer
authorities ("Transfer Documents") into escrow by the terms of this Agreement,
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(ii) pledge to Lender a security interest in the Shares as to all and any
interests, residual, option, or otherwise in the Shares, and (iii) execute and
deliver this Agreement in order to secure the payment and performance by Pledgor
of the Loan;
NOW, THEREFORE, in consideration of the premises and in order to induce Lender
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to make the Loan, Pledgor hereby agrees with Lender as follows:
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SECTION 1. LOAN. Pledgor hereby promises to pay to the Lender or his
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designated agent, the sum of 1,849,000 United States dollars on the following
terms:
(a) the Loan shall be paid in Instalments of $200,000 commencing with the
first payment November 15, 2004 and the like amount each three months
thereafter (each payment an "Instalment") with any remaining sum due
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November 15, 2006 (each payment date being a "Maturity" and the final
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date being the "Due Date");
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(b) subject to the approval of the Lender, the Pledgor may make payment of
any Instalment by assignment of an appropriate number of the Shares,
or other acceptable assets or securities, with such fair market
valuations as the Lender may require and as are acceptable under
relevant generally accepted accounting principles;
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(c) subject to payment of a 10% extension fee (10% of an Instalment) the
Pledgor may defer an Instalment for 90 days twice during the term of
this Agreement; and
(d) the Loan shall bear interest on the declining balance of the Loan at
the rate of five percent (5%) per annum payable with each Instalment
for the preceding three months.
SECTION 2. SHARE ESCROW. Pledgor hereby places into escrow with the Escrow
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Agent (as defined below in the attached Schedule "A" Escrow Agreement) the
Shares and all and every of its interest therein, and Pledgor shall immediately
upon execution hereof deliver to the Escrow Agent:
(a) the certificates representing the Shares; and
(b) if received by Pledgor prior to or after escrow of the Shares
herewith and before payment of the Loan or after realisation by the Lender
of the Shares in execution of its recourses to recover the Loan, all
additional shares of stock of, or equity interest in, Issuer from time to
time acquired by Pledgor in any manner arising by share dividend, stock
split, or otherwise of the Shares, and the certificates representing such
additional shares (any such additional shares shall constitute part of the
Shares under and as defined in this Agreement), and all products and
proceeds of any of such additional Shares, including, without limitation,
all dividends, cash, instruments, subscriptions, warrants and any other
rights and options and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
and all of such additional Shares.
SECTION 3. PLEDGE. Pledgor hereby pledges to Lender, and grants to Lender
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a continuing first priority, and perfected security interest in, the following
(the "Pledged Collateral"):
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(a) the Shares and the certificates representing the Shares and all
interest of the Pledgor therein and extinguishment thereof upon exercise of
the Pledge, and all products and proceeds of any of the Shares including,
without limitation, all dividends (other than as provided elsewhere
herein), cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the Shares; and
(b) all additional shares of stock of, or equity interest in, Issuer
from time to time acquired by Pledgor in respect to the Shares in any
manner arising by share dividend, stock split, or otherwise of the Shares,
and the certificates representing such additional shares (any such
additional shares shall constitute part of the Shares under and as defined
in this Agreement), and all products and proceeds of any of such additional
Shares, including, without limitation, all dividends, cash, instruments,
subscriptions, warrants and any other rights and options and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any and all of such additional Shares.
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SECTION 4. SECURITY FOR OBLIGATIONS. This Agreement secures (i) the due
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and punctual payment in full (and not merely the collectibility) of the
principal of the Loan, and the interest thereon, in each case when due and
payable, according to the terms of the Loan, whether at stated maturity, by
reason of acceleration or otherwise; (ii) the due and punctual payment in full
(and not merely the collectibility) of the obligations, liabilities,
indebtedness and all other sums and charges which may at any time be due and
payable in accordance with, or under the terms of, the Loan, whether at stated
maturity, by reason of acceleration or otherwise; (iii) the due and punctual
payment (and not merely the collectibility), performance and observance of all
of this Pledge Agreement and the other obligations, terms, covenants and
conditions, whether now or hereafter existing, contained in any other collateral
Loan documents (collectively, and together with the Loan, "Loan Documents") and
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to be performed or observed by Pledgor; (iv) the accuracy of the representations
and warranties made by Pledgor in all Loan Documents to which it is a party (all
of the foregoing are collectively hereinafter called the "Obligations"); (the
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Obligations and all such obligations of Pledgor now or hereafter existing under
this Agreement being referred to herein as the "Liabilities").
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SECTION 5. DELIVERY OF SHARES. All certificates or instruments representing
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or evidencing the Shares and all necessary transfer documents in blank of the
Shares, shall be delivered to the Escrow Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Lender.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants
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as follows:
(a) The Shares have been duly authorised and validly issued and are
fully paid and non-assessable.
(b) Pledgor is the legal and beneficial owner of the Pledged
Collateral, free and clear of any lien or any interests by any other person
on the Pledged Collateral.
(c) Upon the delivery by the Escrow Agent of the Shares, the
certificate, and the Transfer Documents, in the event of default the
transfer of the Shares pursuant to this Agreement creates a valid and
perfected transfer of the Shares to the Lender with the caveat that the
Shares are subject to such hold period as may be stated on the certificate.
(d) Upon the delivery to Lender of the Pledged Collateral, the pledge
of the Pledged Collateral pursuant to this Agreement creates a valid and
perfected first priority interest in the Pledged Collateral securing the
payment of the Liabilities for the benefit of Lender.
(e) No authorisation, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body or the Issuer
is required (except applicable material change reports and insider reports)
(i) for the pledge by Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by Pledgor or (ii) for the transfer herein provided or (iii) for the
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exercise by Lender of the rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Agreement.
(f) Pledgor has full power and authority to enter into this Agreement
and has the right to vote, pledge and grant a security interest in the
Shares as provided by this Agreement.
(g) This Agreement has been duly authorised, executed and delivered
by Pledgor and constitutes a legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms, except
as such enforceability may be limited by the effect of any applicable
bankruptcy, insolvency, reorganisation, moratorium or other similar laws.
(h) The preamble to this Agreement is made a part of this Agreement
and the terms stated therein are true and accurate.
SECTION 7. FURTHER ASSISTANCE. Pledgor agrees that at any time and from
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time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver, or cause to be executed and delivered, all stock powers, proxies,
assignments, instruments and documents and take all further action, that is
reasonably necessary, at Lender's request, in order to perfect any transfer or
security interest granted or purported to be granted hereby or to enable Lender
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral and to carry out the provisions and purposes hereof.
SECTION 8. TRANSFER OF SHARES Pledgor hereby authorises Lender at any time
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to cause the Shares to be transferred and registered to the Lender or any other
party the Lender may determine for the purpose of realising on the Shares to
acquire proceeds to pay the Loan.
SECTION 9. TRANSFERS AND OTHER LIENS. Except for the purpose of securing
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proceeds to retire the Loan, Pledgor agrees that it will not (i) sell or
otherwise dispose of, or grant any option with respect to, any of the Shares
until the Loan comes due, is unpaid and any rectification of default period has
expired unremedied , except with the written permission of the Pledgor, which
shall not be unreasonably with held, or (ii) create or permit to exist any lien
upon or with respect to any of the Pledged Collateral, except for the security
interest granted under this Agreement.
SECTION 10. LENDER APPOINTED ATTORNEY-IN-FACT. In addition to all of the
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powers granted to Lender pursuant to the Loan, Pledgor hereby appoints Lender as
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in Lender's
discretion to take any action and to execute any instrument which Lender may
deem necessary or advisable to further perfect and protect the security interest
granted hereby, including, without limitation, to receive, endorse and collect
all instruments made payable to Pledgor representing any dividend, interest or
principal payment or other distribution in respect of the Pledged Collateral or
any part thereof and to give full discharge for the same.
SECTION 11. LENDER MAY PERFORM. If Pledgor fails to perform any agreement
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contained herein, Lender may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Lender incurred in connection
therewith shall be payable by Pledgor.
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SECTION 12. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
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powers granted to Lender hereunder of the Pledge are being granted in order to
preserve and protect Lender's security interest in and to the Pledged Collateral
granted hereby and shall not be interpreted to, and shall not, impose any duties
on Lender in connection therewith. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which Lender accords its own property, it being understood that Lender
shall not have any responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Pledged Collateral, whether or not Lender has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral.
SECTION 13. SUBSEQUENT CHANGES AFFECTING COLLATERAL. Pledgor represents to
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Lender that Pledgor has made its own arrangements for keeping informed of
changes or potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of dividends,
payments of interest and/or principal, reorganisation or other exchanges, tender
offers and voting rights), and Pledgor agrees that Lender shall have no
responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto. Pledgor covenants that it will not, without the prior written
consent of Lender, sell or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral or create or permit to exist any lien
upon or with respect of any of the Pledged Collateral.
SECTION 14. REMEDIES UPON DEFAULT. If any Event of Default shall have
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occurred and be continuing and Pledgor shall not have rectified within ten (10)
days of notice of default, Lender shall, in addition to all other rights given
by law or by this Agreement, the Loan or otherwise, have all the rights and
remedies with respect to the Pledged Collateral of a secured party under the
laws of British Columbia and Lender may, without notice and at its option,
transfer or register, and Pledgor shall register or cause to be registered upon
request therefore by Lender, the Pledged Collateral or any part thereof on the
books of Issuer into the name of Lender or Lender's nominee(s), indicating that
such Pledged Collateral is subject to the security interest hereunder. In
addition, with respect to any Pledged Collateral which shall then be in or shall
thereafter come into the possession or custody of Lender, Lender may sell or
cause the same to be sold at any broker's board or at public or private sale, in
one or more sales or lots, at such price or prices as Lender may deem best, for
cash or on credit or for future delivery, without assumption of any credit risk,
all in accordance with the terms and provisions of the Loan and this Agreement,
or may exercise such other remedies as may be provided under law. The purchaser
of any or all Pledged Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any kind whatsoever.
Any sale of the Pledged Collateral shall be conducted by Lender without any
notice requirement and as full owner thereof and Lender is not required to
conduct the same in conformity with commercial practices of banks, insurance
companies, commercial finance companies, or other financial institutions
disposing of property similar to the Pledged Collateral. Any requirement of
notice, demand or advertisement for sale is, to the extent permitted by law,
waived. All expenses (including court costs and reasonable attorneys' fees,
expenses and disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or other
disposition of the Pledged Collateral.
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SECTION 15. EXPENSES. Pledgor will upon demand pay to Lender the amount of
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any and all reasonable expenses, including, without limitation, the reasonable
fees, expenses and disbursements of its counsel (and, upon the occurrence and
during the continuance of an Event of Default, the fees, expenses and
disbursements of any investment banking firm, business broker or other selling
agent and any other experts and agents retained by Lender), which Lender may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realisation upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Lender hereunder or (iv) the failure by
Pledgor to perform or observe any of the provisions hereof.
SECTION 16. SECURITY INTEREST ABSOLUTE. All rights of Lender and security
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interests hereunder, and all obligations of Pledgor hereunder, shall be absolute
and unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan or any other
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Liabilities, or any other amendment or
waiver of or any consent to any departure from the Loan;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Liabilities; or
(d) any other circumstances which might otherwise constitute a
defence available to, or a discharge of, Pledgor in respect to the
Liabilities or of this Agreement.
SECTION 17. MISCELLANEOUS PROVISIONS.
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SECTION 17.1 Notices. All notices, approvals, consents or other
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communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the parties hereto at their respective
addresses, set forth first herein.
SECTION 17.2 Headings. The headings in this Agreement are for purposes of
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reference only and shall not affect the meaning or construction of any provision
of this Agreement.
SECTION 17.3 Severability. The provisions of this Agreement are severable,
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and if any clause or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect in that jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Agreement in any
jurisdiction.
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SECTION 17.4 Amendments, Waivers and Consents. Any amendment or waiver of
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any provision of this Agreement and any consent to any departure by Pledgor from
any provision of this Agreement shall be effective only if made or given in
writing.
SECTION 17.5 Continuing Security Interest. This Agreement shall create a
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continuing security interest in the Pledged Collateral and shall (i) remain in
full force and effect until payment in full (including after the date for final
payment) of the Obligations and of the Loan and any other Loan Documents, (ii)
be binding upon Pledgor, its successors and assigns, and (iii) enure, together
with the rights and remedies of Lender hereunder, to the benefit of Lender and
its successors, transferees and assigns.
SECTION 17.6 Reinstatement. To the extent permitted by law, this Agreement
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shall continue to be effective or be reinstated if at any time any amount
received by Lender in respect of the Liabilities is rescinded or must otherwise
be restored or returned by Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganisation of Pledgor or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for Pledgor or
any substantial part of its assets, or otherwise, all as though such payments
had not been made.
SECTION 17.7 Survival of Provisions. All representations, warranties and
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covenants of Pledgor contained herein shall survive the execution and delivery
of this Agreement, and shall terminate only upon the full and final payment and
performance by Pledgor of the Obligations secured hereby and termination of the
Loan and any other Loan Documents.
SECTION 17.8 Waiver of Demand. Pledgor waives presentment and demand for
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payment of any of the Liabilities, protest and notice of dishonour or default
with respect to any of the Liabilities, and all other notices to which Pledgor
might otherwise be entitled, except as otherwise expressly provided herein.
SECTION 17.9 Authority of Lender. Lender shall have and be entitled to
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exercise all powers hereunder which are specifically granted to Lender by the
terms hereof, together with such powers as are reasonably incident thereto.
Lender may perform any of its duties hereunder or in connection with the Pledged
Collateral by or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel concerning all such
matters. Neither Lender nor any officer, employee, attorney or agent of Lender
shall be liable to Pledgor for any action taken or omitted to be taken by it or
them hereunder, except for its or their own gross negligence or wilful
misconduct, nor shall Lender be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished pursuant hereto.
Lender and its officers, employees, attorneys and agents shall be entitled to
rely on any communication, instrument or document reasonably believed by it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons. Pledgor agrees to indemnify and hold harmless Lender and any
person of the Lender from and against any and all costs, expenses (including
reasonable fees, expenses and disbursements of attorneys and paralegals), claims
and liabilities incurred by Lender or such person hereunder, unless such claim
or liability shall be due to wilful misconduct or gross negligence on the part
of Lender or such person.
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SECTION 17.10 Release; Termination of Agreement. Subject to the provisions
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of Section 17.6 hereof, this Agreement shall terminate upon full and final
payment and performance of all the Obligations.
SECTION 17.11 Counterparts. This Agreement may be executed in one or more
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counterparts and may be executed by facsimile, each of which shall be deemed an
original but all of which shall together constitute one and the same agreement.
SECTION 17.14 Governing Law; Submission to Jurisdiction; Counsel
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(a) This Agreement shall be governed by and interpreted under the
laws of the Province of British Columbia and any dispute arising out of,
connected with, related to, or incidental to the relationship established
between Pledgor and Lender in connection with this Agreement, and whether
arising in contract, tort, equity or otherwise, shall be resolved in
British Columbia, Canada
(b) Pledgor (i) agrees that Lender shall not have any liability to
Pledgor (whether sounding in tort, contract or otherwise) for losses
suffered by Pledgor in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established
by this Agreement, or any act, omission or event occurring in connection
therewith, unless it is determined by a judgement of a court that is
binding on Lender (which judgement shall be final and not subject to review
on appeal) that such losses were the result of acts or omissions on the
part of Lender constituting gross negligence or wilful misconduct and (ii)
waives, releases and agrees not to ▇▇▇ upon any claim against Lender
(whether sounding in tort, contract or otherwise), except a claim based
upon gross negligence or wilful misconduct. Whether or not such damages are
related to a claim that is subject to the waiver effected above and whether
or not such waiver is effective, Lender shall not have any liability with
respect to, and Pledgor hereby waives, releases and agrees not to ▇▇▇ upon
any claim for, any special, indirect, consequential or punitive damages
suffered by Pledgor in connection with, arising out of, or in any way
related to the transactions contemplated or the relationship established by
this Agreement, or any act, omission or event occurring in connection
therewith, unless it is determined by a judgement of a court that is
binding on Lender (which judgement shall be final and not subject to review
on appeal), that such damages were the result of acts or omissions on the
part of Lender constituting wilful misconduct.
(c) Pledgor and Lender acknowledges that for the purpose of this
Agreement and the security contemplated herein that ▇▇▇▇▇▇ ▇▇▇▇▇▇ acts for
the Lender, Pledgor and Lender release ▇▇▇▇▇▇ ▇▇▇▇▇▇ from any conflict with
the Escrow Agent duties which have been requested of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Pledgor
and Lender subscribe to and endorse the Escrow Agent provisions of Schedule
"A" following their initial signatures hereto, and Pledgor has been advised
to seek its own counsel and has taken its own counsel for this purpose.
(d) Pledgor waives the posting of any bond otherwise required of
Lender in connection with any judicial process or proceeding to enforce any
judgement or other court order entered in favour of Lender, or to enforce
by specific performance, temporary restraining order or preliminary or
permanent injunction this Agreement or any other Agreement or document
between Pledgor and Lender.
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IN WITNESS WHEREOF, Pledgor and Lender have each caused this Agreement to
be duly executed and delivered as of the date first above written.
PLEDGOR:
▇▇▇▇ ▇▇▇▇
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/s/ ▇▇▇▇ ▇▇▇▇
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Signature
LENDER:
Sinovac Biotech Ltd.
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Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇
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Authorized Signatory
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SCHEDULE "A"
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ESCROW AGREEMENT
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THIS ESCROW AGREEMENT is made and dated effective (the "Effective Date") as
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of the 12th day of October, 2004 and is a collateral agreement and attached as a
document to the above Pledge, Share Transfer and Promissory Note Agreement
("Pledge Agreement").
BETWEEN:
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SINOVAC BIOTECH LTD.
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(hereinafter referred to as the "Lender" or the "Issuer");
OF THE FIRST PART
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AND:
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▇▇▇▇ ▇▇▇▇
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(hereinafter referred to as "Pledgor")
OF THE SECOND PART
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(the foregoing hereinafter also singularly referred to as a
"Party" and collectively referred to as the "Parties" as the
context so requires).
AND
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▇▇▇▇▇▇ ▇▇▇▇▇▇ or such escrow agent as the Parties may
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subsequently appoint or such escrow agent as subsequently may be
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appointed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ or a court of competent jurisdiction,
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of ▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
(hereinafter referred to as the "Escrow Agent" but not a
"Party");
OF THE THIRD PART
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WHEREAS:
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A. The Parties have requested that the Escrow Agent act as escrow holder of
the Shares as contemplated by the Pledge, Escrow and Promissory Note
Agreement and the Escrow Agent has agreed subject to the below terms;
B. All definitions of the Pledge, Escrow and Promissory Note Agreement are
herein incorporated by reference but none of the terms or obligations of
the Pledge Agreement are incorporated herein and the Escrow Agent is not
imposed with any obligations other than those of this Escrow Agreement;
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C. The Issuer has also joined to this Agreement to assist in the correction of
any defects of Shares or delivery and to ensure the acceptability of
transfer of the Shares;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
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premises and consideration now provided by each of the Parties and the Escrow
Agent hereto, each to the other (the receipt whereof is hereby acknowledged),
and in further consideration of the mutual covenants and conditions hereinafter
contained, the Parties each with the other and with the Escrow Agent hereto
agree as follows:
1. The Lender and Pledgor hereby agree to the deposit of the Shares and
Transfer Documents (collectively hereafter the "Shares") with and that the
same shall be delivered to the Escrow Agent to be held in accordance with
this Agreement.
2. The Escrow Agent hereby agrees to accept delivery and custody of the Shares
for the purposes of this Agreement on the following specific agreements and
understanding by the Lender and Pledgor and such Parties warrant
irrevocably to abide by and that they are bound by such provisions:
(a) the Escrow Agent is general counsel for Lender but not for this
document or the Pledge Agreement, such is recognized by the Parties,
all Parties waive conflict thereof, the Lender and Pledgor have
received actual and specific legal counsel from separate counsel in
regard to this matter, and the Lender and Pledgor are executing this
Agreement without any reliance or expectation whatever of the Escrow
Agent except as escrow holder as specifically required by the terms of
the escrow of this Agreement;
(b) this agreement constitutes covenants only and there is no trust hereof
and should any trust be implied hereof (which would be contrary to the
intention of this Agreement) then such is a limited trust specifically
for the purposes of this Agreement and for no other purpose, shall be
interpreted strictly and with limitation and not by inferential
interpretation and not widely and generously;
(c) the Escrow Agent may resign at any time and tender the Shares to court
or appoint an alternate escrow agent and tender the Shares to the
alternate and immediately upon such tendering the Escrow Agent shall
be relieved of all and any accountability thereafter;
(d) the duty of the Escrow Agent is solely that of good faith and normal
care merely to preserve the Shares and communicate adequately with the
Parties and the Escrow Agent shall have no duty or obligation to
determine any rights between the Parties, to interpret this Agreement,
or to take any other act other than to preserve the Shares. In the
event of conflict in respect to the Shares the Escrow Agent may
determine to retain possession of the Shares without liability
whatsoever until instructed by mutual direction of the Parties or
until directed by a court of competent jurisdiction. In the event that
the Escrow Agent has communicated any matter to a Party notifying of
an act or an understanding or an interpretation or an intention to
deliver or receipt of a matter or any other matter for which the
Escrow Agent is giving information or notice or requesting response
then a Party shall not complain and shall have waived all right to
complain for the matters disclosed therein if the Party has not
objected within ten business days thereof and if the Escrow Agent is
requesting response then a Party shall answer within such time frame.
The Escrow Agent shall be absolutely entitled to rely upon the
veracity, truthfulness, authenticity, and integrity of communication
by the Parties and shall not be obliged to inquire as to their bona
fides or assume any defect therein and should a Party effect false
communications or should a third party employ instruments of the
Parties to effect false or deceptive acts then the Escrow Agent shall
have no liability therefore. In the event the Shares are lost or
destroyed while in the possession of the Escrow Agent, the Parties
agree that such is a non-actionable accident without cost or recourse
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to the Escrow Agent and the Parties warrant to effect all matters as
shall be required to cancel the lost certificate and replace the same
into the possession of the Escrow Agent;
(e) the Parties waive any and all claims against the Escrow Agent for any
acts conducted pursuant hereto except only where the Escrow Agent acts
in fraud or overt bad faith for personal profit (and for such purpose
error, negligence, confusion or mistake of interpretation, force
majeure, act of third party, employee error and the like shall not be
extended to be interpreted as bad faith but bad faith shall mean its
normal and extreme meaning of an act taken with the objective intent
of effecting a wrong purpose) and any claim in respect to the same
shall be consequent upon actual and observable and documented default
of such nature and not inferential or interpretive or speculative and
in the interpretation of such matters the onus and burden of proof
(whether at trial or on a motion, inter alia, by the Escrow Agent to
dismiss for insufficient evidence) shall be on the claimant making
claim against the Escrow Agent and shall be on a level of beyond a
reasonable doubt. A Party making complaint against the Escrow Agent
for default based upon inferential, speculative or interpretive claims
shall be deemed irrevocably to be acting in bad faith and maliciously
or for collateral improper purposes (in this latter case such shall be
inferred if the facts reasonably illustrate that such claim is made in
whole or in part to exert a leverage) and such a claiming Party shall
be liable for the maximal damages and costs allowable in the
appropriate jurisdiction;
(f) the Parties, jointly and severally (and a contributing Party shall
have a right of claim from the non-contributing Parties), do hereby
warrant and agree from time to time and at all times hereafter well
and truly to save, defend and keep harmless and fully indemnify the
Escrow Agent, its successors and assigns, from and against all loss,
costs, charges, damages and expenses which the Escrow Agent, its
successors or assigns, may at any time hereafter bear, sustain, suffer
or be put to for or by reason or on account of its acting as Escrow
Agent pursuant to this Agreement except only in the event of bad faith
or fraud, which shall not be assumed or employed as a plea to defeat a
claim for indemnity unless such has first been adjudged by a court of
competent jurisdiction. Unless a claimant shall first have received
approval of a court of competent jurisdiction, pursuant to motion duly
served and replied in the ordinary course (and not ex parte or
expedited), and unless such court has found on a balance of
probabilities on the evidence served by both parties that the Escrow
Agent did probably commit fraud or bad faith, then failure to pay
indemnity or advance costs shall be a fundamental default of this
Agreement and shall be irrevocably deemed to be an act of bad faith
and malice and the claim of the claimant shall be dismissed completely
with prejudice for such matter alone. The Escrow Agent may, at it sole
election, require that one or either Parties pre-advance any costs or
fees to which the Escrow Agent may be put upon delivering to such
Party estimates, quotes, or bills of the relevant professionals; and
(g) in case proceedings should hereafter be taken in any court respecting
the Shares hereby escrowed or respecting the Escrow Agent and its
duties and acts (or allegations of misdeeds), the Escrow Agent shall
not be obliged to defend any such action or submit its rights to the
court until it shall have been indemnified by good and sufficient
security or advance of expected costs in addition to the indemnity
given against its costs of such proceedings and in the event that a
Party or Parties refuses or neglects to provide indemnity or otherwise
violates the terms of this section then the Escrow Agent shall have,
as a matter of right, the election to enjoin and suspend the
proceedings until the Parties provide proper and sufficient indemnity
and until the actions and pleadings of the Parties are consistent with
and compliant with the obligations and restrictions of this section
and in the event that a pleading Party does not so conform its actions
and provide indemnity then the Escrow Agent shall have the right, and
the pleading Party waives all defenses, to have any actions dismissed
with prejudice as a consequence of such default of the pleading Party.
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3. The Shares shall be delivered into possession of the Escrow Agent to be
held and delivered by the Escrow Agent as follows in accordance with the
following circumstances:
(a) the Shares shall be delivered to the Lender in the event that the
Lender shall give written notice of unremedied default of the Loan or
Collateral Documents and, upon the Escrow Agent giving the Pledgor
five (5) business days notice, the Pledgor has not provided
documentary proof materially contravening the Lender's notice; or
(b) the Shares shall be delivered to the Pledgor in the event the Pledgor
gives the Escrow Agent notice of payment of Loan and the Lender has
not objected within five (5) business days of notice by the Escrow
Agent. The Pledgor may request release of up to 15% of the Shares
after each Installment payment of the Loan of the Pledge, Escrow and
Promissory Note Agreement; or
(c) in the event that if neither Party has given notice as to instruction
for delivery of the Shares within six months of the Due Date the
Escrow Agent may determine, after ten business days notice, to deliver
the Shares to the Pledgor or, failing delivery by non-acceptance or
non-location of the Pledgor, to the Issuer.
Instructions to or by the Escrow Agent as to the forgoing shall be given by
written copy to the Escrow Agent with copies to the Parties. In all matters
in respect to the forgoing the Escrow Agent shall copy each Party with all
correspondence. At the time of intention to deliver the Shares as above if
no objection is taken within the stated time then the Parties shall have no
complaint and the Escrow Agent shall be fully and completely discharged of
all duties, accountabilities or claims and this Agreement shall terminate
but that the provisions of section 2 hereof shall continue for the benefit
of the Escrow Agent for a period of ten years.
The Pledgor hereby permits the Escrow Agent to register the Shares in the
name of the Escrow Agent, or any contracted nominee, and to split the
Shares into several certificates for the purposes of efficient
administration of this escrow. The Escrow Agent or his nominee shall
provide the Pledgor with voting powers of attorney in respect to any Shares
so registered.
4. The Lender agrees that the Shares are delivered pursuant to exemptions from
prospectus requirements, the Lender is an exempt sophisticated/accredited
investor who does not require qualification, filing, notice, or other
qualifying act in their jurisdiction and the Lender agrees and acknowledges
that the Shares are or may be subject to restrictions under prevailing
securities laws and that the certificate for the same will be impressed
with the appropriate legends advised by counsel.
5. The Lender shall be entitled to a letter or receipt from the Escrow Agent
stating the Shares are held by the Escrow Agent subject to the terms of
this Agreement; but such letter or receipt shall not be assignable. The
cost of this Agreement shall be borne by the Issuer.
6. This Agreement shall enure to the benefit of and be binding upon the
Parties and the Escrow Agent hereto, their and each of their heirs,
executors, administrators, successors and permitted assigns. All notices
shall be delivered to the Parties at the addresses set forth in the Pledge
Agreement or to the e-mails set forth below and delivery thereto shall be
considered absolute regardless of whether an occupant is present. All
addresses for notice shall be changed only with delivery of notice of
change.
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7. This Agreement may be executed in several parts in the same form and such
part as so executed shall together constitute one original agreement and
such parts, if more than one, shall be read together and construed as if
all the signing Parties hereto had executed one copy of this Agreement.
This Agreement and executions may be exchanged by fax and such faxed copies
shall be irrevocably deemed originals.
8. This Agreement shall be subject to the exclusive jurisdiction of British
Columbia and the courts thereof.
9. The Issuer warrants that regardless of any defect, actual or alleged, in
any transfer documents of the Shares, or of the Shares, that the Issuer
will take and act upon and conclude, without debate, the requests of the
Escrow Agent, the Pledgor or the Lender (individually or collectively) to
transfer the Shares to the Lender at such time as the Lender may take the
same in accordance with the Pledge Agreement.
IN WITNESS WHEREOF the Parties have executed these presents as and from the
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day and year above written.
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Authorized Signatory )
SINOVAC BIOTECH LTD. )
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Authorized Signatory )
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Signature )